Negotiation Basics

Fundamental Strategies
ORGS 4560
Chris Bell
 Negotiation Characteristics
• 2 or more parties
• Conflict of needs and desires
• Negotiate by choice
• Preference for negotiation over other
options
• Manage tangibles (outcome) and
intangibles (face, trust, fairness, reputation,
relationship)
 Negotiation Characteristics
• Interdependence
– Distributive v. integrative negotiation
– Claiming value v. creating value
• Capitalizing on differences

• Norm of reciprocity
– Mutual adjustment and concession making
– Trust & Honesty
 Distributive Negotiations
Distributive
Value Claiming
Win-Lose

Distribute resources

Maximize individual gains

No future relations

Single issue
 Negotiation Structure
• Targets and Reservation Points
– ZOPA: zone of potential agreement

BT SR BR ST

• According to norms of reciprocity and characteristics of

bidding, the most likely outcome is to split the difference
between targets (opening bids)
– Reservation points may put pressure on bidding increments,
influencing how near the outcome is to midpoint

• Value claimed = Outcome - Reservation Point

– For Seller, Outcome – RP = profit gained
– For Buyer, RP - Outcome = savings realized
 Integrative Negotiations
Integrative
Value Creating
Win-Win

Expand resources
Maximize joint and
individual gains
Long-term relations
Multiple issues
 Negotiation Strategy
• BATNA: Best Alternative to Negotiated Agreement
• What is your BATNA?
• What is your best assessment of your opponent’s BATNA?

• Issues
• What are the specific objects of the negotiation?
• Positions
• What is your stand on the issues?
• What is your opponent’s stand on the issues?
• Interests
• What is at stake in the negotiation?
• Do your interests differ from your opponents?
Concern for other’s interests & outcomes
Negotiation Behavior

Yielding / Problem solving /

Accommodating Collaborating

Compromising

Inaction / Contending /
Avoidance Competing

Concern for own interest’s and outcomes

 Negotiation Denouement
• Closure and Implementation

– formalize an agreement
– implementation and monitoring
 Best Practices
1. Be prepared
1. Information gathering
2. Understand goals, interests, aspirations

2. Diagnose the negotiation structure

1. Distributive or integrative?
2. Nature of interdependency

3. BATNA

4. Be willing to walk away.

 Best Practices
5. Key Paradoxes
1. Claiming value v. creating value
2. Consistency – stick by your principles
3. Consistency – stick with your strategy
4. Honest and open v. closed and opaque
5. Trust v distrust

6. Remember the intangibles

 Best Practices
7. Protect your reputation

8. Rationality and fairness are relative

9. Actively manage coalitions

10. Continue to learn from your experience!

 Negotiation Journal
• Strategy
– What issues do you think are going to be toughest?
• What will you resist or be willing to give on?
• What will the other party resist or be willing to give on?

• How will the discussion go?

• What tactics do you think you may be able to use?
• What do you need to beware of?

• Review
– Where and how were you successful? Unsuccessful?
 Preparation & Reflection
• a. what you expected in the situation
• b. how you prepared for the negotiation
• c. how you and others in the group
behaved
• d. what you learned about your skills
• e. what you would do differently the next
time around
 Preparation & Reflection
• What are your strengths as a negotiator? (be very specific)
• What are your weaknesses as a negotiator? How can you
ameliorate them?
• What qualities/techniques did you admire in the negotiation of
others? (again, be very specific)
• What experiences from the simulations and exercises were
especially memorable to you? What lessons did you learn?
(Here you may want to discuss some details of how you and your
counterparts negotiated particular exercises.)
• What lessons from lectures, readings, and/or class discussion did
you especially resonate with? Why?
• What did you find particularly surprising? In what ways (if any)
has this course changed the way that you think about
negotiation?
• Have you seen any lessons of the course play themselves out
especially poignantly in your personal or professional life?